The state of Montana collected $1.8 million in the first year of taxing the medical marijuana industry, according to government officials. The Montana Department of Revenue also reported that the state’s medicinal cannabis businesses had generated approximately $45 million in sales during the first year of taxation.

State revenue director Gene Walborn told local media that the department was happy with the rollout of taxes on Montana’s medical marijuana industry.

“We were pleasantly surprised on how well it went,” he said. “It being a new tax, we were concerned what challenges you receive with a new tax.”

Medical Marijuana Taxes Began Last Year

Montana began levying a quarterly tax on cannabis businesses last year with the enactment of Senate Bill 333, an overhaul of the state’s medical marijuana program. Montana has not legalized the recreational use of cannabis.

Taxes for the first year were set at four percent and began on July 1, 2017. The revenue generated will be used to create additional state regulatory infrastructure including testing, inspections, and a seed-to-sale tracking system. The tax was subsequently reduced to 2 percent as of July 1 of this year and is expected to remain at that rate for the foreseeable future.

The marijuana taxes generated more than $1.3 million dollars during the 2018 fiscal year. Taxes for July of this year totaled $458,000 and will be included in revenue figures for the fiscal year 2019. Taxes collected since the program began last year came to a total of $1.8 million, according to state officials.

Tax Revenue Exceeds Expectations

The taxes raised were almost twice as much as state officials expected. A fiscal analysis of Senate Bill 333 determined that the 4 percent tax would raise approximately $750,000 the first year. Director Walborn said that the state’s medical marijuana providers were very cooperative with the revenue department. He also noted that more providers paid their taxes electronically than expected, resulting in the department handling less cash than anticipated.

The Montana Department of Health and Human Services began issuing rules to govern the state’s medical marijuana program earlier this year. The department has already begun licensing cannabis businesses and enrolling patients in the program. Regulators have also started to track cannabis products through the state’s supply chain.

The state has also begun inspecting cannabis businesses including testing labs, cultivation facilities, edibles kitchens, manufacturers of cannabis-infused products, and dispensaries.

420 Providers Of 420

As of July, Montana officials reported a total of 420 medical marijuana providers had registered with the state. Of those, 72 are medicinal cannabis dispensaries. So far, three cannabis analytic testing labs have been licensed by the state, with another license pending as of July.

The number of patients registered in the state’s medical marijuana program the first year also exceeded what government officials predicted. Montana had 26,549 patients enrolled in the medicinal cannabis program as of last month. The number of patients began growing rapidly in 2016 after the state’s Initiative 182 was passed. That measure made it easier for patients to enroll in the program by removing some restrictions. More than 1,000 new patients signed up each month during 2017, according to state officials.